UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                 TO

Commission File Number:

001-12251

AMERISAFE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Texas	75-2069407
(State of Incorporation)	(I.R.S. Employer Identification Number)
2301 Highway 190 West, DeRidder, Louisiana	70634
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (337) 463-9052

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	AMSF	NASDAQ

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes ☒    No  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐     No  ☒

As of October 29, 2019, there were 19,300,309 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.

TABLE OF CONTENTS

		Page
		No.
FORWARD-LOOKING STATEMENTS		3
PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4	Controls and Procedures	28
PART II - OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6	Exhibits	29

2

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and the insurance industry in general. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following:

• the cyclical nature of the workers’ compensation insurance industry;

• increased competition on the basis of types of insurance offered, premium rates, coverage availability, payment terms, claims management, safety services, policy terms, overall financial strength, financial ratings and reputation;

• general economic conditions, including recession, inflation, performance of financial markets, interest rates, unemployment rates and fluctuating asset values;

• changes in relationships with independent agencies;

• developments in capital markets that adversely affect the performance of our investments;

• technology breaches or failures, including those resulting from a malicious cyber attack on the Company or its policyholders and medical providers;

• decreased level of business activity of our policyholders caused by decreased business activity generally, and in particular in the industries we target;

• greater frequency or severity of claims and loss activity than our underwriting, reserving or investment practices anticipate based on historical experience or industry data;

• adverse developments in economic, competitive, judicial or regulatory conditions within the workers’ compensation insurance industry;

• loss of the services of any of our senior management or other key employees;

• changes in regulations, laws, rates, rating factors, or taxes applicable to the Company, its policyholders or the agencies that sell its insurance;

• changes in current accounting standards or new accounting standards;

• changes in legal theories of liability under our insurance policies;

• changes in rating agency policies, practices or ratings;

• changes in the availability, cost or quality of reinsurance and the failure of our reinsurers to pay claims in a timely manner or at all;

• the effects of U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts; and

• other risks and uncertainties described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”).

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements in this report, and under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	September 30, 2019			December 31, 2018
	(unaudited)
Assets
Investments:
Fixed maturity securities—held-to-maturity, at amortized cost    (fair value $626,603 and $616,772 in 2019 and 2018, respectively)	$	604,161		$	613,878
Fixed maturity securities—available-for-sale, at fair value    (amortized cost $424,270 and $479,772 in 2019 and 2018, respectively)		440,217			478,730
Equity securities, at fair value    (cost $24,082 and $19,962 in 2019 and 2018, respectively)		25,936			18,651
Short-term investments		20,964			14,231
Total investments		1,091,278			1,125,490
Cash and cash equivalents		125,870			40,344
Amounts recoverable from reinsurers		102,866			112,006
Premiums receivable, net of allowance		170,649			162,478
Deferred income taxes		18,480			21,852
Accrued interest receivable		10,404			10,197
Property and equipment, net		6,430			6,258
Deferred policy acquisition costs		20,341			19,734
Other assets		28,221			17,572
Total assets	$	1,574,539		$	1,515,931
Liabilities and shareholders’ equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	790,812		$	798,409
Unearned premiums		154,635			149,296
Amounts held for others		45,216			41,388
Policyholder deposits		45,383			46,795
Insurance-related assessments		29,035			28,258
Federal income tax payable		1,549			3,412
Accounts payable and other liabilities		39,180			38,611
Total liabilities		1,105,810			1,106,169
Shareholders’ equity:
Common stock:  voting—$0.01 par value authorized shares—50,000,000    in 2019 and 2018; 20,558,559 and 20,528,230 shares issued and 19,300,309    and 19,269,980  shares outstanding in 2019 and 2018, respectively		205			205
Additional paid-in capital		212,743			211,431
Treasury stock, at cost (1,258,250 shares in 2019 and 2018)		(22,370	)		(22,370	)
Accumulated earnings		265,536			221,328
Accumulated other comprehensive income (loss), net		12,615			(832	)
Total shareholders’ equity		468,729			409,762
Total liabilities and shareholders’ equity	$	1,574,539		$	1,515,931

See accompanying notes.

4

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Revenues
Gross premiums written	$	82,629		$	85,324		$	262,754		$	276,368
Ceded premiums written		(2,170	)		(2,283	)		(6,804	)		(6,982	)
Net premiums written	$	80,459		$	83,041		$	255,950		$	269,386
Net premiums earned	$	82,712		$	85,184		$	250,611		$	261,489
Net investment income		8,264			7,884			24,448			22,396
Net realized losses on investments		(4	)		(329	)		(27	)		(1,471	)
Net unrealized gains on equity securities		365			573			3,165			259
Fee and other income		151			217			234			411
Total revenues		91,488			93,529			278,431			283,084
Expenses
Loss and loss adjustment expenses incurred		44,325			47,598			142,807			152,836
Underwriting and certain other operating costs		6,736			8,011			21,704			23,842
Commissions		6,153			6,416			18,764			19,526
Salaries and benefits		6,396			6,179			19,202			18,786
Policyholder dividends		1,265			865			3,363			3,290
Total expenses		64,875			69,069			205,840			218,280
Income before income taxes		26,613			24,460			72,591			64,804
Income tax expense		5,227			4,759			13,915			11,978
Net income	$	21,386		$	19,701		$	58,676		$	52,826
Earnings per share
Basic	$	1.11		$	1.03		$	3.05		$	2.75
Diluted	$	1.11		$	1.02		$	3.04		$	2.74
Shares used in computing earnings per share
Basic		19,256,069			19,216,545			19,243,689			19,204,196
Diluted		19,302,551			19,272,984			19,320,199			19,281,036
Cash dividends declared per common share	$	0.25		$	0.22		$	0.75		$	0.66

See accompanying notes.

5

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019		2018			2019		2018
Net income	$	21,386	$	19,701		$	58,676	$	52,826
Other comprehensive income:
Unrealized gain (loss) on debt securities, net of tax		2,475		(2,118	)		13,447		(7,813	)
Comprehensive income	$	23,861	$	17,583		$	72,123	$	45,013

See accompanying notes.

6

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended September 30, 2019 and 2018

(in thousands, except share data)

(unaudited)

	Common Stock				Additional Paid-In			Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital			Shares			Amounts			Earnings			Income			Total
Balance at June 30, 2019		20,556,511	$	205	$	212,493			(1,258,250	)	$	(22,370	)	$	248,975		$	10,140		$	449,443
Comprehensive income:
Net income		—		—		—			—			—			21,386			—			21,386
Other comprehensive    income:
Change in unrealized    gains, net of tax		—		—		—			—			—			—			2,475			2,475
Comprehensive income:																					23,861
Common stock issued		2,048		—		(1	)		—			—			—			—			(1	)
Share-based compensation		—		—		251			—			—			—			—			251
Dividends to shareholders		—		—		—			—			—			(4,825	)		—			(4,825	)
Balance at September 30, 2019		20,558,559	$	205	$	212,743			(1,258,250	)	$	(22,370	)	$	265,536		$	12,615		$	468,729
	Common Stock				Additional Paid-In			Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital			Shares			Amounts			Earnings			Loss			Total
Balance at June 30, 2018		20,528,230	$	205	$	210,895			(1,258,250	)	$	(22,370	)	$	258,744		$	(2,083	)	$	445,391
Comprehensive income:
Net income		—		—		—			—			—			19,701			—			19,701
Other comprehensive    income:
Change in unrealized    losses, net of tax		—		—		—			—			—			—			(2,118	)		(2,118	)
Comprehensive income:																					17,583
Share-based compensation		—		—		261			—			—			—			—			261
Dividends to shareholders		—		—		—			—			—			(4,239	)		—			(4,239	)
Balance at September 30, 2018		20,528,230	$	205	$	211,156			(1,258,250	)	$	(22,370	)	$	274,206		$	(4,201	)	$	458,996

See accompanying notes.

7

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Nine Months Ended September 30, 2019 and 2018

(in thousands, except share data)

(unaudited)

	Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings			Income (Loss)			Total
Balance at December 31, 2018		20,528,230	$	205	$	211,431		(1,258,250	)	$	(22,370	)	$	221,328		$	(832	)	$	409,762
Comprehensive income:
Impact of adoption of    ASU 2016-02		—		—		—		—			—			(1	)		—			(1	)
Net income		—		—		—		—			—			58,676			—			58,676
Other comprehensive    income:
Change in unrealized    losses, net of tax		—		—		—		—			—			—			13,447			13,447
Comprehensive income:																				72,123
Common stock issued upon    exercise of options		5,000		—		20		—			—			—			—			20
Common stock issued		25,329		—		559		—			—			—			—			559
Share-based compensation		—		—		733		—			—			—			—			733
Dividends to shareholders		—		—		—		—			—			(14,467	)		—			(14,467	)
Balance at September 30, 2019		20,558,559	$	205	$	212,743		(1,258,250	)	$	(22,370	)	$	265,536		$	12,615		$	468,729
	Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings			Income (Loss)			Total
Balance at December 31, 2017		20,504,165		204		210,081		(1,258,250	)		(22,370	)		233,896			3,612			425,423
Comprehensive income:
Impact of adoption of    ASU 2016-01		—		—		—		—			—			614			—			614
Impact of adoption of    ASU 2018-02		—		—		—		—			—			(414	)		—			(414	)
Net income		—		—		—		—			—			52,826			—			52,826
Other comprehensive    income:
Change in unrealized    gains, net of tax		—		—		—		—			—			—			(7,813	)		(7,813	)
Comprehensive income:																				45,013
Common stock issued upon    exercise of options		15,000		—		67		—			—			—			—			67
Common stock issued		9,065		1		195		—			—			—			—			196
Share-based compensation		—		—		813		—			—			—			—			813
Dividends to shareholders		—		—		—		—			—			(12,716	)		—			(12,716	)
Balance at September 30, 2018		20,528,230	$	205	$	211,156		(1,258,250	)	$	(22,370	)	$	274,206		$	(4,201	)	$	458,996

See accompanying notes.

8

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended September 30,
	2019			2018
Operating activities
Net income	$	58,676		$	52,826
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		684			748
Net amortization of investments		6,520			8,414
Deferred income taxes		(203	)		1,388
Net realized losses on investments		27			1,471
Net unrealized gains on equity securities		(3,165	)		(259	)
Net realized losses on disposal of assets		2			—
Share-based compensation		882			1,074
Changes in operating assets and liabilities:
Premiums receivable, net		(8,171	)		(4,391	)
Accrued interest receivable		(207	)		(141	)
Deferred policy acquisition costs		(607	)		(1,075	)
Amounts held by others		—			(7,855	)
Other assets		(949	)		2,692
Reserves for loss and loss adjustment expenses		(7,597	)		19,284
Unearned premiums		5,339			7,897
Reinsurance balances		9,140			(19,136	)
Amounts held for others and policyholder deposits		2,416			2,621
Accounts payable and other liabilities		(309	)		5,185
Net cash provided by operating activities		62,478			70,743
Investing activities
Purchases of investments held-to-maturity		(115,712	)		(71,872	)
Purchases of investments available-for-sale		(46,104	)		(82,519	)
Purchases of equity securities		(4,120	)		(5,251	)
Purchases of short-term investments		(79,224	)		(133,355	)
Proceeds from maturities of investments held-to-maturity		120,498			85,322
Proceeds from sales and maturities of investments available-for-sale		90,244			79,539
Proceeds from sales and maturities of short-term investments		73,039			48,965
Proceeds from redemptions of other investments		—			130
Purchases of property and equipment		(858	)		(1,083	)
Net cash provided by (used in) investing activities		37,763			(80,124	)
Financing activities
Proceeds from stock option exercises		20			67
Finance lease purchases		(35	)		—
Dividends to shareholders		(14,700	)		(12,921	)
Net cash used in financing activities		(14,715	)		(12,854	)
Change in cash and cash equivalents		85,526			(22,235	)
Cash and cash equivalents at beginning of period		40,344			55,559
Cash and cash equivalents at end of period	$	125,870		$	33,324

See accompanying notes.

9

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Basis of Presentation

AMERISAFE, Inc. (the “Company”) is an insurance holding company incorporated in the state of Texas. The accompanying unaudited consolidated financial statements include the accounts of AMERISAFE and its subsidiaries: American Interstate Insurance Company (“AIIC”) and its insurance subsidiaries, Silver Oak Casualty, Inc. (“SOCI”) and American Interstate Insurance Company of Texas (“AIICTX”), Amerisafe Risk Services, Inc. (“RISK”) and Amerisafe General Agency, Inc. (“AGAI”). AIIC and SOCI are property and casualty insurance companies organized under the laws of the state of Nebraska. AIICTX is a property and casualty insurance company organized under the laws of the state of Texas. RISK, a wholly owned subsidiary of the Company, is a claims and safety service company currently servicing only affiliated insurance companies. AGAI, a wholly owned subsidiary of the Company, is a general agent for the Company. AGAI sells insurance, which is underwritten by AIIC, SOCI and AIICTX, as well as by nonaffiliated insurance carriers. The assets and operations of AGAI are not significant to that of the Company and its consolidated subsidiaries.

The terms “AMERISAFE,” the “Company,” “we,” “us” or “our” refer to AMERISAFE, Inc. and its consolidated subsidiaries, as the context requires.

The Company provides workers’ compensation insurance for small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, and agriculture. Assets and revenues of AIIC and its subsidiaries represent at least 95% of comparable consolidated amounts of the Company for each of the nine months ended September 30, 2019 and 2018.

In the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, the results of operations and cash flows for the periods presented. The unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q under the Securities Exchange Act of 1934 and therefore do not include all information and footnotes to be in conformity with accounting principles generally accepted in the United States (“GAAP”). The results for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The unaudited consolidated financial statements contained herein should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2018.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues and expenses and related disclosures.  Some of the estimates result from judgments that can be subjective and complex and, consequently, actual results in future periods might differ from these estimates.

Adopted Accounting Guidance

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).  The new guidance requires a lessee to recognize a lease liability and a right of use asset for all leases extending beyond twelve months.  This standard was effective for us beginning in the first quarter of 2019. We elected the new transition method under the transition guidance within the new standard. Therefore, prior comparative periods are not adjusted.  We also elected the package of practical expedients, which among other things, allows us to carryforward the historical lease classification.  We made an accounting policy election not to recognize lease assets and lease liabilities for short-term operating leases. Adoption of the new guidance resulted in the Company recognizing right-of-use assets of $0.4 million and lease liabilities of $0.3 million. The cumulative effect adjustment to the opening balance of retained earnings was minimal. Adoption of this new guidance did not have a material effect on the Company’s consolidated financial statements as the Company does not have any significant leases.  

Prospective Accounting Guidance

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses.  The current guidance delays the recognition of credit losses until a probable loss has occurred.  The new guidance requires credit losses for securities measured at amortized cost to be determined using current expected credit loss estimates.  These estimates are to be derived from historical, current and reasonable supporting forecasts, including prepayments and estimates, and will be recorded through a valuation account.  The same method will be used for available-for-sale securities, but the valuation account will be limited to the amount by which the fair value is below amortized cost.  The standard is effective for us in the first quarter of 2020.  Implementation of the new guidance requires a modified retrospective approach without restatement, which means the first cumulative adjustment required will be a charge to retained earnings, with subsequent changes in the valuation account reported in the income statement.  The financial statement impact will be determined by the nature of the portfolio held and the economic conditions at the time of implementation.

10

In establishing a current expected credit allowance for held-to-maturity fixed income securities under the new accounting standard, the Company will use a probability of default and loss given default methodology based on the securities credit rating and maturity date of the specific security.  The amount is currently estimated to be in the range of $250,000 to $400,000.  This estimated amount will change depending on the amount of held-to-maturity fixed income securities, the credit ratings and maturity dates of those securities, at the time of implementation of the new current expected credit loss accounting standard.

In establishing a current expected credit allowance for reinsurance recoverables under the new accounting standard, the Company will use a probability of default and loss given default methodology based on the credit ratings of our reinsurers.  The amount is currently estimated to be in the range of $400,000 to $600,000.  This estimated amount will change depending on the amount of reinsurance recoverables and the ratings of our reinsurers at the time of implementation of the new current expected credit loss accounting standard.

The Company’s internal working group has evaluated the remainder of the balance sheet assets, including available-for-sale securities and net premiums receivable, and determined the implementation of the new credit loss guidance in relation to those assets will have an immaterial impact on the financial statements.  

The estimated impacts could change based upon economic changes, events or conditions.  The Company will continue to monitor and evaluate the financial impact as the implementation date approaches.  

All other issued but not yet effective accounting and reporting standards as of September 30, 2019 are either not applicable to the Company or are not expected to have a material impact on the Company.

Note 2. Stock Options and Restricted Stock

As of September 30, 2019, the Company has two equity incentive plans: the AMERISAFE Non-Employee Director Restricted Stock Plan (the “Restricted Stock Plan”) and the AMERISAFE 2012 Equity and Incentive Compensation Plan (the “2012 Incentive Plan”). In connection with the approval of the 2012 Incentive Plan by the Company’s shareholders, no further grants were made under the AMERISAFE 2005 Incentive Plan.  There are no outstanding options or restricted stock awards under the 2005 Incentive Plan. See Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 for additional information regarding the Company’s incentive plans.

During the nine months ended September 30, 2019, the Company issued 9,391 shares of common stock pursuant to vested performance awards, 11,048 shares of restricted common stock to officers, and 4,890 shares of restricted common stock to non-employee directors.  The market value of these shares totaled $1.5 million.  During the nine months ended September 30, 2018, the Company issued 3,304 shares of common stock pursuant to vested performance awards to executive officers and 5,761 shares of restricted common stock to non-employee directors. The market value of these shares totaled $0.5 million.

During the nine months ended September 30, 2019 and 2018, options to purchase 5,000 and 15,000 shares of common stock were exercised, respectively. In connection with these exercises, the Company received $19.8 thousand of stock option proceeds in the current year and $66.9 thousand of stock option proceeds in the same period of 2018.  The Company had no stock options outstanding as of September 30, 2019.

The Company recognized share-based compensation expense of $0.4 million in the quarter ended September 30, 2019 and $0.3 million for the same period in 2018.  The Company recognized share-based compensation expense of $0.9 million in the nine months ended September 30, 2019 and $1.1 million for the same period in 2018.  

Note 3. Earnings Per Share

The Company computes earnings per share (“EPS”) in accordance with FASB Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share. The Company has no participating unvested common shares which contain nonforfeitable rights to dividends and applies the treasury stock method in computing basic and diluted earnings per share.

Basic EPS is calculated by dividing net income by the weighted-average number of common shares outstanding during the period.

11

The diluted EPS calculation includes potential common shares assumed issued under the treasury stock method, which reflects the potential dilution that would occur if any outstanding options were exercised or restricted stock becomes vested.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
	(in thousands, except share and per share amounts)
Basic EPS:
Net income	$	21,386	$	19,701	$	58,676	$	52,826
Basic weighted average common shares		19,256,069		19,216,545		19,243,689		19,204,196
Basic earnings per common share	$	1.11	$	1.03	$	3.05	$	2.75
Diluted EPS:
Net income	$	21,386	$	19,701	$	58,676	$	52,826
Diluted weighted average common shares:
Weighted average common shares		19,256,069		19,216,545		19,243,689		19,204,196
Stock options and restricted stock		46,482		56,439		76,510		76,840
Diluted weighted average common shares		19,302,551		19,272,984		19,320,199		19,281,036
Diluted earnings per common share	$	1.11	$	1.02	$	3.04	$	2.74

Note 4. Investments

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at September 30, 2019 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	438,055	$	19,978	$	(3	)	$	458,030
Corporate bonds		115,982		1,587		(108	)		117,461
U.S. agency-based mortgage-backed securities		11,910		607		(1	)		12,516
U.S. Treasury securities and obligations of U.S.    government agencies		37,513		406		(21	)		37,898
Asset-backed securities		701		1		(4	)		698
Totals	$	604,161	$	22,579	$	(137	)	$	626,603

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as available-for-sale at September 30, 2019 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	217,944	$	12,249	$	(2	)	$	230,191
Corporate bonds		142,011		3,417		(7	)		145,421
U.S. agency-based mortgage-backed securities		24,458		20		(55	)		24,423
U.S. Treasury securities and obligations    of U.S. government agencies		39,857		406		(81	)		40,182
Totals	$	424,270	$	16,092	$	(145	)	$	440,217

The gross unrealized gains and losses on, and the cost of equity securities at September 30, 2019 are summarized as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Equity securities:
Domestic common stock	$	24,082	$	1,854	$	—	$	25,936
Total equity securities	$	24,082	$	1,854	$	—	$	25,936

12

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at December 31, 2018 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	445,922	$	5,109	$	(2,084	)	$	448,947
Corporate bonds		91,762		62		(455	)		91,369
U.S. agency-based mortgage-backed securities		8,102		327		(80	)		8,349
U.S. Treasury securities and obligations    of U.S. government agencies		67,042		340		(339	)		67,043
Asset-backed securities		1,050		22		(8	)		1,064
Totals	$	613,878	$	5,860	$	(2,966	)	$	616,772

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as available-for-sale at December 31, 2018 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
States and political subdivisions	$	231,848	$	3,515	$	(2,118	)	$	233,245
Corporate bonds		173,904		243		(933	)		173,214
U.S. agency-based mortgage-backed securities		12,835		—		(320	)		12,515
U.S. Treasury securities and obligations    of U.S. government agencies		61,185		—		(1,429	)		59,756
Totals	$	479,772	$	3,758	$	(4,800	)	$	478,730

The gross unrealized gains and losses on, and the cost of equity securities at December 31, 2018 are summarized as follows:

	Cost		Gross Gains		Gross Losses			Fair Value
	(in thousands)
Equity securities:
Domestic common stock	$	19,962	$	30	$	(1,341	)	$	18,651
Total equity securities	$	19,962	$	30	$	(1,341	)	$	18,651

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as held-to-maturity at September 30, 2019, by contractual maturity, is as follows:

	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	60,720	$	61,141
After one year through five years		207,941		211,604
After five years through ten years		101,986		105,588
After ten years		220,903		235,056
U.S. agency-based mortgage-backed securities		11,910		12,516
Asset-backed securities		701		698
Totals	$	604,161	$	626,603

13

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale at September 30, 2019, by contractual maturity, is as follows:

	Amortized Cost		Fair Value
	(in thousands)
Maturity:
Within one year	$	38,130	$	38,207
After one year through five years		137,900		140,142
After five years through ten years		45,985		48,358
After ten years		177,797		189,087
U.S. agency-based mortgage-backed securities		24,458		24,423
Totals	$	424,270	$	440,217

The following table summarizes the fair value and gross unrealized losses on securities, aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss position:

	Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)
September 30, 2019
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	4,277	$	3	$	—	$	—	$	4,277	$	3
Corporate bonds		13,241		67		8,208		41		21,449		108
U.S. agency-based mortgage-backed securities		404		1		—		—		404		1
U.S. Treasury securities and obligations    of U.S. government agencies		—		—		3,236		21		3,236		21
Asset-backed securities		363		1		169		3		532		4
Total held-to-maturity securities		18,285		72		11,613		65		29,898		137
Available-for-Sale
Fixed maturity securities:
States and political subdivisions	$	4,189	$	2	$	—	$	—	$	4,189	$	2
Corporate bonds		—		—		7,093		7		7,093		7
U.S. agency-based mortgage-backed securities		13,194		35		3,928		20		17,122		55
U.S. Treasury securities and obligations    of U.S. government agencies		1,008		2		17,048		79		18,056		81
Total available-for-sale securities		18,391		39		28,069		106		46,460		145
Total	$	36,676	$	111	$	39,682	$	171	$	76,358	$	282

14

	Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)
December 31, 2018
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	28,369	$	59	$	180,550	$	2,025	$	208,919	$	2,084
Corporate bonds		17,448		36		48,315		419		65,763		455
U.S. agency-based mortgage-backed securities		—		—		2,287		80		2,287		80
U.S. Treasury securities and obligations    of U.S. government agencies		2,865		4		46,486		335		49,351		339
Asset-backed securities		—		—		525		8		525		8
Total held-to-maturity securities		48,682		99		278,163		2,867		326,845		2,966
Available-for-Sale
Fixed maturity securities:
States and political subdivisions	$	16,109	$	81	$	76,255	$	2,037	$	92,364	$	2,118
Corporate bonds		59,099		279		70,306		654		129,405		933
U.S. agency-based mortgage-backed securities		—		—		12,515		320		12,515		320
U.S. Treasury securities and obligations    of U.S. government agencies		—		—		59,756		1,429		59,756		1,429
Total available-for-sale securities		75,208		360		218,832		4,440		294,040		4,800
Total	$	123,890	$	459	$	496,995	$	7,307	$	620,885	$	7,766

At September 30, 2019, we held 43 individual fixed maturity securities that were in an unrealized loss position, of which 21 individual fixed maturity securities were in a continuous unrealized loss position for longer than 12 months.

During the third quarter of 2019, we recognized through income $0.4 million of net unrealized gains on equity securities held as of September 30, 2019.  During the third quarter of 2018, we recognized through income $0.6 million of net unrealized gains on equity securities held as of September 30, 2018.  

During the nine months ended September 30, 2019, we recognized through income $3.2 million of net unrealized gains on equity securities held as of September 30, 2019.  During the nine months ended September 30, 2018, we recognized through income $0.3 million of net unrealized gains on equity securities held as of September 30, 2018.

Investment income is recognized as it is earned. The discount or premium on fixed maturity securities is amortized using the “constant yield” method. Anticipated prepayments, where applicable, are considered when determining the amortization of premiums or discounts. Realized investment gains and losses are determined using the specific identification method.

We regularly review our investment portfolio to evaluate the existence of other-than-temporary declines in the fair value of investments. We consider various factors in determining if a decline in the fair value of an individual security is other-than-temporary. The key factors we consider are:

• any reduction or elimination of preferred dividends, or nonpayment of scheduled principal or interest payments;

• the financial condition and near-term prospects of the issuer of the applicable security, including any specific events that may affect its operations or earnings;

• how long and by how much the fair value of the security has been below its cost or amortized cost;

• any downgrades of the security by a rating agency;

• our intent not to sell the security for a sufficient time period for it to recover its value;

• the likelihood of being required to sell the security before the recovery of its value; and

• an evaluation as to whether there are any credit losses on debt securities.

15

We reviewed all securities with unrealized losses in accordance with the impairment policy described above. We determined that the unrealized losses in the fixed maturity securities portfolio related primarily to changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally. We expect to recover the carrying value of these securities as it is not more likely than not that we will be required to sell the securities before the recovery of its amortized cost basis.

During the three and nine months ended September 30, 2019 and 2018, there were no impairment losses recognized for other-than-temporary declines in the fair value of our investments.

Net realized losses in the quarter ended September 30, 2019 were immaterial.  Net realized losses in the quarter ended September 30, 2018 were $0.3 million resulting from called fixed maturity securities.

Net realized losses in the nine months ended September 30, 2019 were immaterial.  Net realized losses in the nine months ended September 30, 2018 were $1.5 million resulting from the sale of equity and fixed maturity securities classified as available-for-sale and called fixed maturity securities.

Note 5. Income Taxes

In accordance with FASB ASC Topic 740, “Income Taxes,” we provide for the recognition and measurement of deferred income tax benefits based on the likelihood of their realization in future years. As of September 30, 2019, the Company had a valuation allowance of $0.2 million against its deferred income tax benefits.  

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions recognized for the periods ended September 30, 2019 and 2018.

Tax years 2015 through 2018 are subject to examination by the federal and state taxing authorities.

Note 6. Loss Reserves

We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of policy claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid as of a given point in time.  The reserves for loss and loss adjustment expenses are estimated using individual case-basis valuations, statistical analyses and estimates based upon experience for unreported claims and their associated loss and loss adjustment expenses. Such estimates may be more or less than the amounts ultimately paid when the claims are settled. The estimates are subject to the effects of trends in loss severity and frequency. Although considerable variability is inherent in these estimates, management believes that the reserves for loss and loss adjustment expenses are adequate. The estimates are continually reviewed internally and periodically evaluated with our independent actuary.  Adjustments are made as experience develops and new information becomes known.  Any such adjustments are included in income from current operations.  See Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 for additional information regarding the Company’s loss and loss adjustment expense development.

16

The following table provides the Company’s liability for unpaid loss and loss adjustment expenses, net of related amounts recoverable from reinsurers, for the nine months ended September 30, 2019 and 2018:

	Nine Months Ended September 30,
	2019			2018
	(in thousands)
Balance, beginning of period	$	798,409		$	771,845
Less amounts recoverable from reinsurers    on unpaid loss and loss adjustment expenses		107,216			84,889
Net balance, beginning of period		691,193			686,956
Add incurred related to:
Current accident year		181,693			186,964
Prior accident years		(38,886	)		(34,128	)
Total incurred		142,807			152,836
Less paid related to:
Current accident year		35,512			37,901
Prior accident years		105,590			115,194
Total paid		141,102			153,095
Net balance, end of period		692,898			686,697
Add amounts recoverable from reinsurers    on unpaid loss and loss adjustment expenses		97,914			104,432
Balance, end of period	$	790,812		$	791,129

The foregoing reconciliation reflects favorable development of the net reserves at September 30, 2019 and September 30, 2018. The favorable development reduced loss and loss adjustment expenses incurred by $38.9 million and $34.1 million in 2019 and 2018, respectively. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled.  Multiple factors can cause loss development both unfavorable and favorable. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement.

Note 7. Comprehensive Income and Accumulated Other Comprehensive Income

Comprehensive income was $23.9 million for the three months ended September 30, 2019, compared to $17.6 million for the three months ended September 30, 2018.  Comprehensive income was $72.1 million for the nine months ended September 30, 2019, compared to $45.0 million for the same period in 2018.  The difference between net income as reported and comprehensive income was due to changes in unrealized gains and losses, net of tax on available-for-sale debt securities.

Comprehensive income includes net income plus unrealized gains (losses) on our available-for-sale investment securities, net of tax. In reporting comprehensive income on a net basis in the statements of comprehensive income, we used a 21 percent tax rate in 2019 and 2018. The following table illustrates the changes in the balance of each component of accumulated other comprehensive income for each period presented in the interim financial statements.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019		2018			2019			2018
	(in thousands)
Balance, beginning of period	$	10,140	$	(2,083	)	$	(832	)	$	3,612
Other comprehensive income (loss) before    reclassification		2,467		(2,143	)		12,844			(7,964	)
Amounts reclassified from accumulated other    comprehensive income		8		25			603			151
Net current period other comprehensive    income (loss)		2,475		(2,118	)		13,447			(7,813	)
Balance, end of period	$	12,615	$	(4,201	)	$	12,615		$	(4,201	)

17

The sale or other-than-temporary impairment of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive income to current period net income. The effects of reclassifications out of accumulated other comprehensive income by the respective line items of net income are presented in the following table.

Component of Accumulated Other	Three Months Ended						Nine Months Ended						Affected line item in the
Comprehensive Income	September 30,						September 30,						statement of income
	2019			2018			2019			2018
	(in thousands)
Unrealized losses on    available-for-sale securities	$	(10	)	$	(32	)	$	(764	)	$	(445	)	Net realized losses on    investments
		(10	)		(32	)		(764	)		(445	)	Income before income taxes
		2			7			161			40		Income tax expense
	$	(8	)	$	(25	)	$	(603	)	$	(405	)	Net income

Note 8. Fair Value Measurements

The Company carries available-for-sale securities at fair value in our consolidated financial statements and determines fair value measurements and disclosure in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures.

The Company determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard defines fair value, describes three levels of inputs that may be used to measure fair value, and expands disclosures about fair value measurements.

Fair value is defined in ASC Topic 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is the price to sell an asset or transfer a liability and, therefore, represents an exit price, not an entry price. Fair value is the exit price in the principal market (or, if lacking a principal market, the most advantageous market) in which the reporting entity would transact. Fair value is a market-based measurement, not an entity-specific measurement, and, as such, is determined based on the assumptions that market participants would use in pricing the asset or liability. The exit price objective of a fair value measurement applies regardless of the reporting entity’s intent and/or ability to sell the asset or transfer the liability at the measurement date.

ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present value amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset, also known as current replacement cost. Valuation techniques used to measure fair value are to be consistently applied.

In ASC Topic 820, inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable:

• Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity.

• Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

18

Valuation techniques used to measure fair value are intended to maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into the following three levels:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data.

• Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are to be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.

The fair values of the Company’s investments are based upon prices provided by an independent pricing service. The Company has reviewed these prices for reasonableness and has not adjusted any prices received from the independent provider. Securities reported at fair value utilizing Level 1 inputs represent assets whose fair value is determined based upon observable unadjusted quoted market prices for identical assets in active markets. Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2019.

At September 30, 2019, assets measured at fair value on a recurring basis are summarized below:

	September 30, 2019
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)
Financial instruments carried at fair value, classified as a part of:
Securities available-for-sale—fixed maturity:
States and political subdivisions	$	—	$	230,191	$	—	$	230,191
Corporate bonds		—		145,421		—		145,421
U.S. agency-based mortgage-backed securities		—		24,423		—		24,423
U.S. Treasury securities		40,182		—		—		40,182
Total securities available-for-sale—fixed maturity		40,182		400,035		—		440,217
Equity securities:
Domestic common stock		25,936		—		—		25,936
Total	$	66,118	$	400,035	$	—	$	466,153

At September 30, 2019, assets measured at amortized cost are summarized below:

	September 30, 2019
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)
Securities held-to-maturity—fixed maturity:
States and political subdivisions	$	—	$	458,030	$	—	$	458,030
Corporate bonds		—		117,461		—		117,461
U.S. agency-based mortgage-backed securities		—		12,516		—		12,516
U.S. Treasury securities		7,891		—		—		7,891
Obligations of U.S. government agencies		—		30,007		—		30,007
Asset-backed securities		—		698		—		698
Total held-to-maturity	$	7,891	$	618,712	$	—	$	626,603

19

At December 31, 2018, assets measured at fair value on a recurring basis are summarized below:

	December 31, 2018
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)
Financial instruments carried at fair value, classified as part of:
Securities available-for-sale—fixed maturity:
States and political subdivisions	$	—	$	233,245	$	—	$	233,245
Corporate bonds		—		173,214		—		173,214
U.S. agency-based mortgage-backed securities		—		12,515		—		12,515
U.S. Treasury securities and obligations    of U.S. government agencies		59,756		—		—		59,756
Total securities available-for-sale—fixed maturity	$	59,756	$	418,974	$	—	$	478,730
Equity securities:
Domestic common stock		18,651		—		—		18,651
Total	$	78,407	$	418,974	$	—	$	497,381

At December 31, 2018, assets measured at amortized cost are summarized below:

	December 31, 2018
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)
Securities held-to-maturity—fixed maturity:
States and political subdivisions	$	—	$	448,947	$	—	$	448,947
Corporate bonds		—		91,369		—		91,369
U.S. agency-based mortgage-backed securities		—		8,349		—		8,349
U.S. Treasury securities		7,111		—		—		7,111
Obligations of U.S. government agencies		—		59,932		—		59,932
Asset-backed securities		—		1,064		—		1,064
Total held-to-maturity	$	7,111	$	609,661	$	—	$	616,772

The Company determines fair value amounts for financial instruments using available third-party market information. When such information is not available, the Company determines the fair value amounts using appropriate valuation methodologies. Nonfinancial instruments such as real estate, property and equipment, deferred policy acquisition costs, deferred income taxes and loss and loss adjustment expense reserves are excluded from the fair value disclosure.

At September 30, 2019, the Company did not hold any securities measured at fair value on a nonrecurring basis due to impairment.

Cash and Cash Equivalents —The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values, which are characterized as Level 1 assets.

Investments —The fair values for fixed maturity and equity securities are based on prices obtained from an independent pricing service. Equity and treasury securities are characterized as Level 1 assets, as their fair values are based on quoted prices in active markets. Fixed maturity securities, other than treasury securities, are characterized as Level 2 assets, as their fair values are determined using observable market inputs.

Short Term Investments —The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values. These securities are characterized as Level 2 assets in the fair value hierarchy.

20

The following table summarizes the carrying values and corresponding fair values for financial instruments:

	As of  September 30, 2019				As of  December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in thousands)
Assets:
Fixed maturity securities—held-to-maturity	$	604,161	$	626,603	$	613,878	$	616,772
Fixed maturity securities—available-for-sale		440,217		440,217		478,730		478,730
Equity securities		25,936		25,936		18,651		18,651
Short-term investments		20,964		20,964		14,231		14,231
Cash and cash equivalents		125,870		125,870		40,344		40,344

Note 9. Treasury Stock

The Company’s Board of Directors initiated a share repurchase program in February 2010. In October 2016, the Board reauthorized this program with a limit of $25.0 million with no expiration date.  There were no shares repurchased under this program in the nine months ended September 30, 2019 and 2018.

Note 10. Leases

The Company has operating and finance leases for office space and equipment.  Our leases have remaining lease terms of four months to 52 months, some of which include options to extend the leases for up to five years.  The Company, in determining the present value of lease payments, utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

Supplemental balance sheet information related to leases is as follows:

	September 30, 2019			Balance Sheet Classification
	(in thousands)
Operating leases:
Operating lease right-of-use assets	$	469		Other assets
Operating lease liabilities	$	469		Accounts payable and other liabilities
Finance leases:
Finance lease right-of-use assets	$	185
Finance lease accumulated amortization    right-of-use assets		(164	)
Property and equipment, net	$	21		Property and equipment, net
Finance lease liabilities	$	67		Accounts payable and other liabilities

Note 11. Subsequent Events

On October 29, 2019, the Company’s Board of Directors declared an extraordinary dividend of $3.50 per share payable on November 20, 2019 to shareholders of record as of November 13, 2019.

On October 29, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share payable on December 27, 2019 to shareholders of record as of December 13, 2019. The Board considers the payment of a regular cash dividend each calendar quarter.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q, together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2018.

We begin our discussion with an overview of our Company to give you an understanding of our business and the markets we serve. We then discuss our critical accounting policies. This is followed with a discussion of our results of operations for the three and nine months ended September 30, 2019 and 2018. This discussion includes an analysis of certain significant period-to-period variances in our consolidated statements of operations. Our cash flows and financial condition are discussed under the caption “Liquidity and Capital Resources.”

Business Overview

AMERISAFE is a holding company that markets and underwrites workers’ compensation insurance through its insurance subsidiaries. Workers’ compensation insurance covers statutorily prescribed benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment. Our business strategy is focused on providing this coverage to small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, and agriculture. Employers engaged in hazardous industries pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar. The higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers. Hazardous industry employers also tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses. We provide proactive safety reviews of employers’ workplaces. These safety reviews are a vital component of our underwriting process and also promote safer workplaces. We utilize intensive claims management practices that we believe permit us to reduce the overall cost of our claims. In addition, our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns that cause underwriting, safety or fraud concerns. We believe that the higher premiums typically paid by our policyholders, together with our disciplined underwriting and safety, claims and audit services, provide us with the opportunity to earn attractive returns for our shareholders.

We actively market our insurance in 27 states through independent agencies, as well as through our wholly owned insurance agency subsidiary. We are also licensed in an additional 20 states, the District of Columbia and the U.S. Virgin Islands.

Critical Accounting Policies

Understanding our accounting policies is key to understanding our financial statements. Management considers some of these policies to be very important to the presentation of our financial results because they require us to make significant estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. Some of the estimates result from judgments that can be subjective and complex and, consequently, actual results in future periods might differ from these estimates.

Management believes that the most critical accounting policies relate to the reporting of reserves for loss and loss adjustment expenses, including losses that have occurred but have not been reported prior to the reporting date, amounts recoverable from reinsurers, premiums receivable, assessments, deferred policy acquisition costs, deferred income taxes, the impairment of investment securities and share-based compensation. These critical accounting policies are more fully described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2018.

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Results of Operations

The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2019 and 2018.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(dollars in thousands, except per share data)
	(unaudited)
Gross premiums written	$	82,629		$	85,324		$	262,754		$	276,368
Net premiums earned		82,712			85,184			250,611			261,489
Net investment income		8,264			7,884			24,448			22,396
Total revenues		91,488			93,529			278,431			283,084
Total expenses		64,875			69,069			205,840			218,280
Net income		21,386			19,701			58,676			52,826
Diluted earnings per common share	$	1.11		$	1.02		$	3.04		$	2.74
Other Key Measures
Net combined ratio (1)		78.4	%		81.1	%		82.1	%		83.5	%
Return on average equity (2)		18.6	%		17.4	%		17.8	%		15.9	%
Book value per share (3)	$	24.29		$	23.82		$	24.29		$	23.82

(1) The net combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, underwriting and certain other operating costs, commissions, salaries and benefits, and policyholder dividends by net premiums earned in the current period.

(2) Return on average equity is calculated by dividing the annualized net income by the average shareholders’ equity for the applicable period.

(3) Book value per share is calculated by dividing shareholders’ equity by total outstanding shares, as of the end of the period.

Consolidated Results of Operations for Three Months Ended September 30, 2019 Compared to September 30, 2018

Gross Premiums Written. Gross premiums written for the quarter ended September 30, 2019 were $82.6 million, compared to $85.3 million for the same period in 2018, a decrease of 3.2%. The decrease was attributable to a $7.3 million decrease in annual premiums on voluntary policies written during the period. Offsetting this decrease was a $4.1 million increase in premiums resulting from payroll audits and related premium adjustments for policies written in previous quarters and a $0.4 million increase in assumed premium from mandatory pooling arrangements. The effective loss cost multiplier, or ELCM, for our voluntary business was 1.62 for the third quarter ended September 30, 2019 compared to 1.65 for the same period in 2018.

Net Premiums Written. Net premiums written for the quarter ended September 30, 2019 were $80.5 million, compared to $83.0 million for the same period in 2018, a decrease of 3.1%. The decrease was primarily attributable to the decrease in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 2.6% for the third quarter of 2019 and 2018.  For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, 2018.

Net Premiums Earned. Net premiums earned for the third quarter of 2019 were $82.7 million, compared to $85.2 million for the same period in 2018, a decrease of 2.9%. The decrease was primarily attributable to the decrease in net premiums written during the period.

Net Investment Income. Net investment income for the quarter ended September 30, 2019 was $8.3 million, compared to $7.9 million for the same period in 2018, an increase of 4.8%.  The increase was due to slightly higher investment yields on fixed-income securities.  Average invested assets, including cash and cash equivalents, were $1.2 billion in the quarter ended September 30, 2019 and 2018. The pre-tax investment yield on our investment portfolio was 2.7% per annum during the quarter ended September 30, 2019 compared to 2.6% per annum during the same period in 2018. The tax-equivalent yield on our investment portfolio was 3.1% per annum for the quarter ended September 30, 2019 and 3.0% for the same period in 2018. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

Net Realized Gains (Losses) on Investments. Net realized losses on investments for the three months ended September 30, 2019 were immaterial compared to losses of $0.3 million for the same period in 2018. Net realized losses in the third quarter of 2018 were attributable to the call of fixed maturity securities.

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Net Unrealized Gains (Losses) on Equity Securities. Net unrealized gains on equity securities for the three months ended September 30, 2019 were $0.4 million compared to net unrealized gains of $0.6 million for the same period in 2018.

Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses (“LAE”) incurred totaled $44.3 million for the three months ended September 30, 2019, compared to $47.6 million for the same period in 2018, a decrease of $3.3 million, or 6.9%. The current accident year loss and LAE incurred were $60.0 million, or 72.5% of net premiums earned, compared to $60.9 million, or 71.5% of net premiums earned for the same period in 2018. We recorded favorable prior accident year development of $15.6 million in the third quarter of 2019, compared to favorable prior accident year development of $13.3 million in the same period of 2018, as further discussed below in “Prior Year Development.” Our net loss ratio was 53.6% in the third quarter of 2019, compared to 55.9% for the same period of 2018.

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the quarter ended September 30, 2019 were $19.3 million, compared to $20.6 million for the same period in 2018, a decrease of 6.4%. This decrease was primarily due to a $1.0 million decrease in insurance related assessments and a $0.3 million decrease in commission expense.  Our expense ratio was 23.3% in the third quarter of 2019 compared to 24.2% in the third quarter of 2018.

Income Tax Expense. Income tax expense for the three months ended September 30, 2019 was $5.2 million, compared to $4.8 million for the same period in 2018. The increase was attributable to an increase in the pre-tax income to $26.6 million in the quarter ended September 30, 2019 from $24.5 million in the same period in 2018. The effective tax rate for the Company increased to 19.6% in the quarter ended September 30, 2019 from 19.5% in the same period in 2018. The increase in the effective tax rate is due to a lower proportion of tax-exempt income to underwriting income in the quarter relative to the third quarter of 2018.

Consolidated Results of Operations for Nine Months Ended September 30, 2019 Compared to September 30, 2018

Gross Premiums Written. Gross premiums written for the first nine months of 2019 were $262.8 million, compared to $276.4 million for the same period in 2018, a decrease of 4.9%. The decrease was attributable to a $17.1 million decrease in annual premiums on voluntary policies written during the period. Offsetting this decreases was a $3.3 million increase in premiums resulting from payroll audits and related premium adjustments for policies written in previous quarters and a $0.3 million increase in assumed premium from mandatory pooling arrangements.  The ELCM for our voluntary business was 1.61 for the nine months ended September 30, 2019 compared to 1.65 for the same period in 2018.

Net Premiums Written. Net premiums written for the nine months ended September 30, 2019 were $256.0 million, compared to $269.4 million for the same period in 2018, a decrease of 5.0%. The decrease was primarily attributable to the decrease in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 2.6% for the first nine months of 2019 and 2018.  For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, 2018.

Net Premiums Earned. Net premiums earned for the first nine months of 2019 were $250.6 million, compared to $261.5 million for the same period in 2018, a decrease of 4.2%. The decrease was primarily attributable to the decrease in net premiums written during the period.

Net Investment Income. Net investment income for the first nine months of 2019 was $24.4 million, compared to $22.4 million for the same period in 2018, an increase of 9.2%. The increase was due to slightly higher investment yields on fixed-income securities.  Average invested assets, including cash and cash equivalents were $1.2 billion in the nine months ended September 30, 2019 and 2018. The pre-tax investment yield on our investment portfolio was 2.7% per annum during the nine months ended September 30, 2019 compared to 2.5% per annum for the same period in 2018. The tax-equivalent yield on our investment portfolio was 3.1% per annum for the first nine months of 2019 compared to 3.0% in the same period in 2018. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

Net Realized Gains (Losses) on Investments. Net realized losses on investments for the nine months ended September 30, 2019 were immaterial compared to net realized losses of $1.5 million for the same period in 2018.  Net realized losses in the first nine months of 2018 were attributable to the sale of equity and fixed maturity securities classified as available-for-sale and called fixed maturity securities.

Net Unrealized Gains (Losses) on Equity Securities. Net unrealized gains on equity securities for the nine months ended September 30, 2019 were $3.2 million compared to net unrealized gains of $0.3 million for the same period in 2018.

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Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled $142.8 million for the nine months ended September 30, 2019, compared to $152.8 million for the same period in 2018, a decrease of $10.0 million, or 6.6%. The current accident year loss and LAE incurred were $181.7 million, or 72.5% of net premiums earned, compared to $187.0 million, or 71.5% of net premiums earned, for the same period in 2018. We recorded favorable prior accident year development of $38.9 million in the first nine months of 2019, compared to favorable prior accident year development of $34.1 million in the same period of 2018, as further discussed below in “Prior Year Development.” Our net loss ratio was 57.0% in the first nine months of 2019, compared to 58.4% for the same period of 2018.

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the nine months ended September 30, 2019 were $59.7 million, compared to $62.2 million for the same period in 2018, a decrease of 4.0%. This decrease was primarily due to a $1.7 million decrease in insurance related assessments, a $0.8 million decrease in commission expense, and a $0.5 million decrease in premium tax expense.  Offsetting these decreases were a $0.4 million increase in compensation expense and a $0.3 million increase in accounts receivable write-offs.  Our expense ratio was 23.8% in the first nine months of 2019 and 2018.

Income Tax Expense. Income tax expense for the nine months ended September 30, 2019 was $13.9 million, compared to $12.0 million for the same period in 2018. The increase was attributable to an increase in pre-tax income to $72.6 million in the first nine months of 2019 from $64.8 million in the first nine months of 2018. The effective tax rate for the Company increased to 19.2% for the nine months ended September 30, 2019 from 18.5% for the nine months ended September 30, 2018.  The increase in the effective tax rate is due to a lower proportion of tax-exempt income to underwriting income and an increase of $0.2 million for the change in valuation allowance for deferred tax assets for the nine months ended September 30, 2019 compared with the nine months ended September 30, 2018.

Liquidity and Capital Resources

Our principal sources of operating funds are premiums, investment income and proceeds from sales and maturities of investments. Our primary uses of operating funds include payments of claims and operating expenses. Currently, we pay claims using cash flow from operations and invest the remaining funds.

Net cash provided by operating activities was $62.5 million for the nine months ended September 30, 2019, which represented a $8.3 million decrease from $70.7 million in net cash provided by operating activities for the nine months ended September 30, 2018. This decrease in operating cash flow was due to $16.9 million in lower premium cash receipts, an $8.5 million increase in federal taxes paid, a $1.6 million increase in underwriting expenses paid and a $0.8 million increase in dividends paid to policyholders.  Offsetting these amounts were an $11.9 million decrease in losses paid and a $7.9 million decrease in amounts held by others.

Net cash provided by investing activities was $37.8 million for the nine months ended September 30, 2019, compared to net cash used in investment activities of $80.1 million for the same period in 2018. Cash provided by sales and maturities of investments totaled $283.8 million for the nine months ended September 30, 2019, compared to $213.8 million for the same period in 2018. A total of $245.2 million in cash was used to purchase investments in the nine months ended September 30, 2019, compared to $293.0 million in purchases for the same period in 2018.

Net cash used in financing activities in the nine months ended September 30, 2019 was $14.7 million compared to net cash used in financing activities of $12.9 million for the same period in 2018. In the nine months ended September 30, 2019, $14.7 million of cash was used for dividends paid to shareholders compared to $12.9 million in the same period of 2018.  

Investment Portfolio

Our investment portfolio, including cash and cash equivalents, totaled $1.2 billion at September 30, 2019 and December 31, 2018. Purchases of fixed maturity securities are classified as available-for-sale or held-to-maturity at the time of purchase based on the individual security. The reported value of our fixed maturity securities classified as held-to-maturity, as defined by FASB ASC Topic 320, Investments-Debt and Equity Securities, was equal to their amortized cost, and thus was not impacted by changing interest rates. Our equity securities and fixed maturity securities classified as available-for-sale were reported at fair value.

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The composition of our investment portfolio, including cash and cash equivalents, as of September 30, 2019, is shown in the following table:

	Carrying Value		Percentage of Portfolio
	(in thousands)
Fixed maturity securities—held-to-maturity:
States and political subdivisions	$	438,055		36.0	%
Corporate bonds		115,982		9.5	%
U.S. agency-based mortgage-backed securities		11,910		1.0	%
U.S. Treasury securities and obligations of    U.S. government agencies		37,513		3.1	%
Asset-backed securities		701		0.1	%
Total fixed maturity securities—held-to-maturity		604,161		49.7	%
Fixed maturity securities—available-for-sale:
States and political subdivisions		230,191		18.9	%
Corporate bonds		145,421		12.0	%
U.S. agency-based mortgage-backed securities		24,423		2.0	%
U.S. Treasury securities and obligations of    U.S. government agencies		40,182		3.3	%
Total fixed maturity securities—available-for-sale		440,217		36.2	%
Equity securities		25,936		2.1	%
Short-term investments		20,964		1.7	%
Cash and cash equivalents		125,870		10.3	%
Total investments, including cash and cash equivalents	$	1,217,148		100.0	%

Our debt securities classified as available-for-sale are “marked to market” as of the end of each calendar quarter. As of that date, unrealized gains and losses are recorded to Accumulated Other Comprehensive Income (Loss), except when such securities are deemed to be other-than-temporarily impaired. For our securities classified as held-to-maturity, unrealized gains and losses are not recorded in the financial statements until realized or until a decline in fair value, below amortized cost, is deemed to be other-than-temporary.  The change in fair value of our equity investments is presented as a component of net income.

During the three and nine months ended September 30, 2019 and 2018, there were no impairment losses recognized for other-than-temporary declines in the fair value of our investments.

Prior Year Development

The Company recorded favorable prior accident year development of $15.6 million in the three months ended September 30, 2019. The table below sets forth the favorable development for the three and nine months ended September 30, 2019 and 2018 for accident years 2014 through 2018 and, collectively, for all accident years prior to 2014.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in millions)
Accident Year
2018	$	—	$	—	$	—	$	—
2017		1.9		—		3.2		—
2016		6.5		2.4		15.9		5.6
2015		3.3		4.9		8.3		14.3
2014		2.0		3.1		6.3		7.4
Prior to 2014		1.9		2.9		5.2		6.8
Total net development	$	15.6	$	13.3	$	38.9	$	34.1

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The table below sets forth the number of open claims as of September 30, 2019 and 2018, and the number of claims reported and closed during the three and nine months then ended.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Open claims at beginning of period		4,978			5,022			5,190			4,982
Claims reported		1,472			1,536			4,032			4,181
Claims closed		(1,414	)		(1,273	)		(4,186	)		(3,878	)
Open claims at end of period		5,036			5,285			5,036			5,285

The number of open claims at September 30, 2019 decreased by 249 claims as compared to the number of open claims at September 30, 2018. At September 30, 2019, our incurred amounts for certain accident years, particularly 2014 through 2017, developed more favorably than management previously expected. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled.  Multiple factors can cause both favorable and unfavorable loss development. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement.

The assumptions we used in establishing our reserves were based on our historical claims data. However, as of September 30, 2019, actual results for certain accident years have been better than our assumptions would have predicted. We do not presently intend to modify our assumptions for establishing reserves in light of recent results. However, if actual results for current and future accident years are consistent with, or different than, our results in these recent accident years, our historical claims data will reflect this change and, over time, will impact the reserves we establish for future claims.

Our reserves for loss and loss adjustment expenses are inherently uncertain and our focus on providing workers’ compensation insurance to employers engaged in hazardous industries results in our receiving relatively fewer but more severe claims than many other workers’ compensation insurance companies. As a result of this focus on higher severity, lower frequency business, our reserve for loss and loss adjustment expenses may have greater volatility than other workers’ compensation insurance companies. For additional information, see Item 1, “Business—Loss Reserves” in our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the risk of potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk affecting us are credit risk, interest rate risk, and equity price risk. We currently have no exposure to foreign currency risk.

Since December 31, 2018, there have been no material changes in the quantitative or qualitative aspect of our market risk profile. For additional information regarding the Company’s exposure to certain market risks, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2018.

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Item 4. Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information we are required to disclose in reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms specified by the SEC. We note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving the stated goals under all potential future conditions.

Because of its inherent limitations, management does not expect that our disclosure controls and procedures and our internal controls over financial reporting will prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with policies and procedures may deteriorate. Any control system, no matter how well designed and operated, is based upon certain assumptions and can only provide reasonable, not absolute assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to errors or fraud will not occur or that all control issues and instances of fraud, if any within the Company, have been detected.

There have not been any changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Board of Directors initially authorized the Company’s share repurchase program in February 2010. In October 2016, the Board reauthorized this program with no expiration date. As of September 30, 2019, we had repurchased a total of 1,258,250 shares of our outstanding common stock for $22.4 million.  The Company had $25.0 million available for future purchases at September 30, 2019 under this program.  There were no shares repurchased during the three months ended September 30, 2019 and 2018. The purchases may be effected from time to time depending upon market conditions and subject to applicable regulatory considerations.  It is anticipated that future purchases will be funded from available capital.  

Item 6. Exhibits.

Exhibit No.	Description
31.1	Certification of G. Janelle Frost filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Neal A. Fuller filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of G. Janelle Frost and Neal A. Fuller filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMERISAFE, INC.
November 1, 2019	/s/ G. Janelle Frost
	G. Janelle Frost
	President, Chief Executive Officer and Director
	(Principal Executive Officer)
November 1, 2019	/s/ Neal A. Fuller
	Neal A. Fuller
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

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